In 1995, whenFord Motor Co. entered the Indian market, two of India’s top three car makers today— Hyundai Motor Co.‘s local unit and homebred Tata Motors Ltd, then a truck maker—had not even started making cars in India. On the face of it, the company had everything going: a global brand name not unfamiliar to many Indians and a reliable joint venture partner, Mahindra and Mahindra Ltd.
Today, Hyundai Motor India Ltd, which launched the Santro in 1998, and Tata Motors that started accepting bookings for its Indica model in January 1999, are safely ensconced in the second and third spot in the India car hustings. Ford, meanwhile, finds itself in sixth place, behind its counterpart General Motors Corp., with a 2.1% market share.
Ford is trying hard to change that.
With recent events in the US—where Ford together with General Motors Corp. (GM) and Chrysler Llc. is seeking government bailouts—India may not figure on its Michigan, US-based parent’s to-do list but Ford India is still pushing ahead with its ambitious $500 million, or Rs2,390 crore, investments in India, restructuring operations and recasting its product portfolio.
“We’re a cash-positive business,” says Michael Boneham, president and managing director of Ford India Pvt. Ltd. He also points out that unlike GM and Chrysler, Ford is not facing a short-term liquidity issue.
On the initial years of Ford in India, John Parker, who was the first chief executive of the joint venture Mahindra Ford India Ltd, says, “One of the key issues we had then was a corporate product plan that was not ideally suited to India. We didn’t have, in our armoury, those small car products that were going to drive us into India.” Based in Thailand, Parker is now Ford’s executive vice- president for Asia and Africa.
Ford India, Parker says, has now been integrated into the global decision-making structure. This is unlike in the 1990s when plans were made separately for each region and India was mostly seen as a sleepy backwater.
As car markets in America, Europe and Japan slow significantly, all car makers are increasingly pinning their hopes on the developing world to ride them out of the slump. Car sales in America saw a 37% monthly drop in November. Europe and Japan fared only a little better. As a result, China, Russia, India and to a lesser extent Brazil are seen as key to reviving their flagging fortunes.
In India, Ford plans to shift gears and aims to grow at a much faster clip. The company has committed $500 million worth of investments in its Indian operations and plans to launch a small car in 2010 and drive into this fast growing segment.
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